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Bosch Group in India CEO Javier Resúa Organization Development manager Mei Wei Chee Business Development Daniel Chow Business Development Filipa Malheiro Business Analysts Fermín Ezcurra Business Analysts Mariana Silva

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AGENDA Bosch Group in India Bosch group The beginning Internationalization Bosch group nowaday s Organizational Structure New matrix structure in Bosch: Vertizalization Bosch group in India Bosch organization in India Verticalization process Challenges Fragmentation of the organization Confusion and conflict Voice of the Region May Be Lost Resentement Across Different Bosch Companies in India Conclusion

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He was a pioneer and inventor He spent 10 years working around the world which shaped the future directions for Bosh The founder, Robert Bosch ( ) Robert Bosch in 1886 Who established the firm?

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November 15, 1886 First workshop Robert founded “Robert Bosch CmbH” in Stuttgart in 1886 It was a small workshop with a staff of just two He started the company as the “Workshop for Precision Mechanics and Electrical Engineering” Pen drawing of the first workshop, 1886

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International sucess: First office outside Germany in 1898, in London United States in 1906; South Africa, South America and Australia in 1922 Internationalization First Office abroad, London Global Company: 75% of its revenues generated outside Germany More than 350 subsidiaries across 60 countries Products are sold in around 150 countries

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Research & Development Success in innovation and creativity More than 4 billion euros for research and development in 2011 Over 4,800 patents applications worldwide in 2012 International research and technology structure 1,300 employees pave the way for the technologies of tomorrow

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Bosch Group in India

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BOSCH ORGANIZATIONAL STRUCTURE Phase to 1900 No need for formal structure Interact with employees on personal basis Phase to 1925 Transit from craft to industrial production Functional structure Activities differentiated horizontally and vertically to obtain economies of scale Begin international activity Phase to 1960 Functional structure around assembly line system launched in 1925 due to the after effects of WWI Begin diversification Bosch Group in India

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BOSCH ORGANIZATIONAL STRUCTURE Phase to 1990 Restructuring of the company due to WWII Three waves of diversification – Power Tools (1960), Packaging Technology (1964) and Telenorma (1982) Adoption of product divisions Phase to 2007 Required matrix structure Primacy given to geographic structure Phase to now Verticalization achieved by transforming global matrix structure into transnational structure Global divisions, Corporate departments, Regional organization and Global sales and marketing organization Bosch Group in India

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NEW MATRIX STRUCTURE IN BOSCH Bosch Group in India

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VERTICALIZATION With a transnational structure, Bosch generally organize its business along geographic, product and functional levels. Integration is achieved within various product categories or within geographic areas or functions. A transnational structure helps coordinate all related business activities simultaneously. Global Matrix Structure Transnational Structure Bosch Group in India

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1. BOSCH ORGANIZATION IN INDIA Bosch Group in India ▪ Bosch started operating ▪ 1953 – Development of manufacturing operations -> segments: - automotive technology - industry technology - consumer goods and building technology - engineering an IT services ▪ Over the years the company tried to focus on innovation In India, the Bosch group had about employees Revenues around million 11 manufactoring sites and 4 development centers IN 2011

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Bosch Group in India Implications of Verticalization For Bosch Group in India Genesis in poor North America performance (sales and profitability were not too good) Recent changes: Link Indian operations to other countries Increase the set of product divisions Allows best practices, ensues consistency in manufacturing processes and facilitates balancing of production Produce more units at competitive prices

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Bosch Group in India Consequences of these recent changes: Mobility of resources between subsidiaries Uniformity of products and manufacturing methods Development of a global product strategy PROBLEM : Regions may become weak Solution: Country Head. The country head is the head of all entities in India. Local needs of the Indian market and Indian operations are preserved.

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Bosch Group in India Advantages Facilitates coordination of the value chain Decisions consistent with strategic objectives Duplicating activities across subsidiaries Reduces the risk that lower-level of employees make mistakes Consistent dealing with stakeholders Disadvantages Discourage initiative among lower-level employees Demoralized employees simply wait to be told what to do Loss of innovation from bottom-up information flow Slow information flow

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2. VERTICALIZATION PROCESS IN INDIA Bosch Group in India - Started in 2007 and offered several opportunities to Indian units perfome better What are these opportunities?

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Verticalization Process: Opportunities Some of the smallest divisions were neglected These smaller divisions have now the attention of the top managers Limited carres’ opportunities Employees can pursue careers in the global divisions The interaction betwee sectors was limited Indian operations have now the opportunity to participate The opportunity to understand the Dynamics of global industry was unknown Indian bases are now able to develop a global perspective BEFORE AFTER Greater visibility for smaller divisions New Career opportunities New opprtunities to contribute globaly Development of a Global perpective Bosch Group in India

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CHALLENGES 1.Fragmentation of the organization 2.Confusion and conflict 3.Voice of the Region May Be Lost 4.Resentement Across Different Bosch Companies in India

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1. FRAGMENTATION OF THE ORGANIZATION Bosch Group in India Many units instead of one Conflicts between units Profitability became public to every employee Difficult for employee mobility Multiple reporting within India and outside which causes delays in resolving simple issues More profitable divisions are reluctant to “subsidize” the less profitable ones Conflicts between divisions that are supposed to work in synergies because of different goals and incentives Requires the approval of the Global Product Group

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2. CONFUSION AND CONFLICT Bosch Group in India Difficult to adapt to this new method Personality crashes Indian culture Multiple reporting lines The Head of the Division has to report to the MD of Bosch in India and to a person in the Asia region The importance of command is no longer there Strong and assertive personalities dominate over the weak and submissive ones “We do not have the ability to adjust. Some of us talk too much”

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3. VOICE OF REGION MAY BE LOST Bosch Group in India Target responsibility has final authority in case of conflict. Other markets might be more attractive than India.

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3. VOICE OF REGION MAY BE LOST Bosch Group in India Products unique to India may be neglected by Global Product Group. Administrative decisions used to have more freedom before verticalization.

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4. RESENTMENT ACROSS DIFFERENT BOSCH COMPANIES IN INDIA Due to verticalization. Human resources decisions were put into place separately. Bosch Group in India

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CONCLUSION Steady transition from a functional structure to a transnational organisation through the verticalization process. Verticalization presents beneficial opportunities for India, but challenges must be met to facilitate the needs of the Indian market. Bosch Group in India